You may have to pay for early ter­mi­na­tion of lease

A ten­ant’s early can­cel­la­tion may have se­ri­ous fi­nan­cial im­pli­ca­tions for the land­lord

Cape Argus - - METRO - DR SAYED IQBAL MO­HAMED

IT IS IM­POR­TANT to have writ­ten con­fir­ma­tion of early ter­mi­na­tion of a lease con­tract. This safe­guards the re­fund of the se­cu­rity de­posit to the ten­ant and al­lows the land­lord to find a re­place­ment ten­ant. More im­por­tantly, it pre­vents dis­putes and long and ex­pen­sive lit­i­ga­tion.

A ten­ant who blames the land­lord and com­plains about the law be­ing one-sided fails to re­alise that a lease is a con­tract that binds par­ties to carry out spe­cific du­ties. Ful­fill­ing the lease term is one of the du­ties.

A ten­ant who ac­cepts the re­newed lease for another fixed pe­riod is re­quired to oc­cupy the prop­erty for the en­tire pe­riod.

Where the Con­sumer Pro­tec­tion Act ap­plies, the ten­ant can can­cel the fixed lease by giv­ing a month’s no­tice (20 busi­ness days) but this comes with cer­tain con­di­tions.

The land­lord is en­ti­tled to re­cover costs for early can­cel­la­tion. It in­cludes all ex­penses in­curred in se­cur­ing a new ten­ant. This is not to pun­ish the ten­ant, but to al­low a land­lord prej­u­diced by the early can­cel­la­tion to re­ceive rea­son­able com­pen­sa­tion.

The con­trac­tual terms of the lease play a de­ci­sive role in giv­ing a ten­ant the ben­e­fit of the doubt in the in­stance it is al­leged that the land­lord or his rep­re­sen­ta­tive agreed to the early can­cel­la­tion.

A clause that states that any change to the lease must be re­duced to writ­ing and signed by both par­ties for it to be bind­ing will ap­ply to early ter­mi­na­tion.

Take the case of a ten­ant who claims that the let­ting agent ver­bally agreed that there was no prob­lem end­ing the lease six months be­fore its ex­piry.

When the ten­ant hands over the no­tice of can­cel­la­tion, the agent in­forms the ten­ant that there will be a can­cel­la­tion fee and other charges. The ten­ant be­lieves that there was a mu­tual agree­ment to end the lease that was bind­ing, even though the agent was now deny­ing it. The ten­ant is un­likely to suc­ceed if the mat­ter is taken up legally.

The land­lord can hold the ten­ant li­able for rentals for the re­main­ing lease pe­riod un­til a new ten­ant signs a lease. The land­lord may sue for loss of in­come be­cause of the early ter­mi­na­tion of the lease.

The ten­ant’s early can­cel­la­tion may have se­ri­ous fi­nan­cial im­pli­ca­tions for the land­lord.

If the land­lord finds a re­place­ment ten­ant im­me­di­ately, he is obliged to re­fund the full de­posit.

The land­lord, in this in­stance, will also have to aban­don any claim for fu­ture rentals.

The le­gal ar­gu­ment is that the land­lord did not suf­fer fi­nan­cial prej­u­dice by re-let­ting the dwelling and re­ceiv­ing a se­cu­rity de­posit from the new ten­ant, even though the pre­vi­ous ten­ant va­cated the dwelling pre­ma­turely.

The cir­cum­stance of each lease agree­ment is im­por­tant in de­ter­min­ing whether a party is jus­ti­fied in ter­mi­nat­ing the lease early.

In Vela v Dos San­tos (2019) ZAGPJHC 123, the ten­ant, Marta Ed­uardo dos San­tos can­celled her lease when her land­lord Robin Vela failed to rem­edy a ma­te­rial breach.

She paid the rentals up­front for the en­tire six months’ lease pe­riod and later can­celled the lease when her land­lord failed to rem­edy the breach for fail­ing to pro­vide va­cant oc­cu­pa­tion of two flatlets.

Em­ploy­ees of Mit­subishi oc­cu­pied the flatlets on the prop­erty and it was agreed that they would va­cate by end of April 2015. It was fur­ther agreed that rentals for the two months, March and April, would be dis­counted.

The Mit­subishi ten­ants con­tin­ued to oc­cupy the flatlets af­ter April, and Dos San­tos can­celled the lease when the land­lord failed to rec­tify this breach within seven days from June 12. She also claimed the rentals she paid up­front for the re­main­ing pe­riod and the ren­tal de­posit.

The land­lord ap­pealed against the judg­ment granted in the Rand­burg Mag­is­trate’s Court. The ten­ant cross-ap­pealed, claim­ing re­mis­sion of rentals for the two months the flatlets were oc­cu­pied that de­prived her of the full use and en­joy­ment of the prop­erty.

She claimed R60 000 be­ing the amount equal to the con­ces­sion­ary dis­count the land­lord granted her when she agreed that the flatlets would be oc­cu­pied in March and April.

The court found that the amount she claimed as com­pen­sa­tion for di­min­ished use and en­joy­ment of the prop­erty was jus­ti­fied. The land­lord’s ap­peal was dis­missed.

What if the land­lord de­cides to ter­mi­nate be­fore the end of a lease? Would the ten­ant be jus­ti­fied in re­fus­ing to move out?

In Ferox In­vest­ments v Blue Dot Nurs­ery CC t/a Jas­mine Plant and Cen­tre (2006) 1 All SA 17 (O), the new land­lord ter­mi­nated the lease early, al­leg­ing struc­tural dam­age to the prop­erty.

The land­lord turned to the court when ne­go­ti­a­tions for the early ter­mi­na­tion of the lease dead­locked, with the ten­ant re­fus­ing to ac­cept mon­e­tary com­pen­sa­tion.

The court dis­missed the land­lord’s ap­pli­ca­tion to evict the ten­ant on the ba­sis that while the lease al­lowed for early ter­mi­na­tion for se­ri­ous struc­tural dam­age, the land­lord’s grand de­sign was to re­vamp the main com­plex and in­tro­duce new busi­nesses.

The crisp point is that nei­ther the ten­ant nor the land­lord can end the lease be­fore the ex­piry date with­out fi­nan­cial con­se­quences, un­less both par­ties agree to the early ter­mi­na­tion. A writ­ten con­fir­ma­tion pro­tects the par­ties and can be done through an email or any elec­tronic means.

If par­ties are un­able to re­solve their dis­putes re­gard­ing early ter­mi­na­tion, they can turn to the courts and the Ren­tal Hous­ing Tri­bunals.

● Ten­ants who need ad­vice dur­ing the lock­down can What­sApp Pretty Gumede on 071 346 5595, Loshni Naidoo at 071 444 5671, or email loshni@ ocr.org.za and Dr Mo­hamed at civi­crights@ocr.org.za.

The cir­cum­stance of each lease agree­ment is im­por­tant in de­ter­min­ing whether a party is jus­ti­fied in ter­mi­nat­ing the lease early.

Dr Sayed Iqbal Mo­hamed is the chair­per­son of the Or­gan­i­sa­tion of Civic Rights and deputy chair­per­son of the KZN Ren­tal Hous­ing Tri­bunal. He writes in his per­sonal ca­pac­ity.

| LYNNE SLADKY AP African News Agency (ANA)

THE land­lord is en­ti­tled to re­cover costs for early can­cel­la­tion, which in­cludes all ex­penses in­curred in se­cur­ing a new ten­ant.

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